According to published information, when the government withdrew the old Rs. 500 and Rs. 1000 currency notes from circulation on 8 November 2016, the total amount of Indian currency in circulation was Rs. 17.2 trillion (17.5 lac crore). Of this, the total amount of currency in circulation, in Rs. 500 and Rs. 1000 denominations, constituted 86% or a value of Rs. 14.8 trillion (15 lac crore) although they made up only 24% of currency in circulation by volume.
The production and consumption of of Rs. 1000 notes has risen rapidly in the past 16 years at an astounding compound annual growth rate (CAGR) of 46%.
In 2012, the RBI released data on what it costs to print currency notes of each denomination. As the denominations increase so does the absolute cost of each note because of generally lower volumes and, one presumes, a higher level of security features. For example, the cost of printing a Rs. 10 note is almost 10% of the value of the note whereas the cost of printing a Rs. 100 note is less than 2% of its value. The cost of printing the Rs. 100 note (Rs. 1.79) is actually less than the cost of producing the Rs. 50 note (Rs. 1.81) since the volumes of the Rs. 50 are lower and the volumes continue to decline. Producing a Rs. 500 note costs Rs 2.5 and the printing of a Rs. 1,000 note costs Rs. 3.17. The cost of printing the new Rs. 2000 note is said to be in the region of Rs. 3.50.
The cost of printing the Rs. 100 note (Rs. 1.79) is actually less than the cost of producing the Rs. 50 note (Rs. 1.81) since the volumes of the Rs. 50 are lower and the volumes continue to decline.
The new notes have been designed and printed at the Bharatiya Reserve Bank Note Mudran, the RBI’s currency printing press in Mysuru. An estimated 500 million notes of Rs. 2,000 denomination and another 500 million of Rs. 500 denomination have been printed at the press in Mysuru. Some notes have also been printed at the RBI currency printing press in Salboni, West Bengal. The new currency has been printed on currency paper manufactured at a recently established currency paper mill inside the premises of BRBNMPL in Mysuru. The first currency paper plant in the country was inaugurated at Hoshangabad near Bhopal in May 2015. One assumes that the cost of printing the new Rs. 2,000 note, which is supposed to have new levels of security features, will thus come to 1.75% of its value and as the volumes rise, the cost of production should come down further. There have been some reports of the new Rs. 2,000 note bleeding ink in the press and on social media but the government’s Economic Affairs Secretary has tried to reassure the public saying that all intaglio inks tend to rub off to some extent.Â
While the RBI is printing the Rs. 2,000 and Rs. 500 notes at its two printing units in Mysuru in Karnataka and Salboni in West Bengal, the Security Printing and Minting Corporation of India Ltd. (SPMCIL) is printing Rs 500 notes at its two presses in Nashik, Maharashtra and Dewas in Madhya Pradesh. The CNP in Nashik is printing currency notes of all denominations, except the new Rs. 2,000 note. Production of the new notes started about six months ago.
The SPMCIL, which prints government currencies and other security documents and manufactures coins, has nine units across the country, including two each in Nashik and Hyderabad and a unit each in Mumbai, Kolkata, Noida, Dewas and Hoshangabad. The CNP and India Security Press (ISP) are located in Nashik. Revenue stamps, stamp papers, passports and visas are printed at ISP, while banking notes are printed at CNP. On the basis of available information, the total cost of the entire exercise is around Rs. 10,861 crore; the cost of printing the old lot being Rs. 5,932 crore and that of the new lot, Rs. 4,929 crore. What the average Indian loses or wins in the bargain is the trillion dollar question right now.
